Gold Price[1] (XAU/USD[2]), Chart, and Analysis
- US inflation data and next week’s FOMC[3] decision will determine gold’s outlook.
- Client sentiment data shows retail increasing net-long positions.
Today’s US core PCE release (12.30 GMT) and next week’s FOMC policy decision and commentary will steer the price of gold in the short term. Inflation in the US remains at elevated levels and is not seen moving appreciably lower, while the Fed will hike rates by 50 basis points next week, and likely at the next two meetings as well, and give greater clarity about their quantitative tightening program which is expected to start imminently. A backdrop of sharply rising interest rates and unsustainably high inflation will weigh further on the precious metals in the weeks ahead.
For all market-moving data releases and events, see the DailyFX Economic Calendar.[4]
In a report I published earlier this month I highlighted a strong bearish technical signal – a bearish shooting star candle[5] – on the daily gold chart that suggested that the recent uptrend was about to reverse. This signal played out perfectly and sent gold nearly $110/oz. lower over the next 9 days.
Gold Price – Feeling the Strain as US Treasury Yields Continue to Rise[6]
Retail trade data – see below – shows that investors continue to build net-long positions in gold over the past week. We use client sentiment data as a contrarian indicator and this suggests that gold may fall further.
The daily chart shows gold trading around an old technical level of note on either side of $1,916/oz. This level turned from resistance to support over the prior months and now is acting as resistance again. This level also guards an old 61.8% Fibonacci level
